An eBay Reality Check
November 13, 2007It’s time for an eBay Reality Check! It costs money to sell on eBay. The more successful you are, the more it costs you in listing and final value fees. There is no free ride. However, it is a whole lot cheaper to sell on eBay than it is to open up a bricks and mortar storefront in your hometown.
Consider this: Just to have the pleasure of having a storefront at the local strip mall you will be shelling out thousands of dollars a month in rent and that is before the first customer comes through the front door. Then you have to worry about attracting customers, so you have to shell out hundreds to thousands more dollars a month in advertising. Do you realize how many purple widgets you have to sell a month just to cover this basic overhead? A whole truckload…and more!
Do you think you can operate a stand-alone website for less money a month than what it is costing you in eBay fees? Guess again! Do you have any idea how many e-commerce websites there are in this world that sell your purple widget? Go ahead and Google your particular purple widget and see how many results show up. A little overwhelming, isn’t it?
Now try and figure out how you are going to get your e-commerce site to appear high enough in the search engine rankings to actually be noticed. It takes a bit of skill, some luck, and lots of money going towards Search Engine Optimization (SEO) and purchasing Google AdWords, etc.
There are a number of very vocal eBay Sellers and critics who claim eBay is gouging the eBay Community through their fees. The simple truth of the matter is you are paying eBay to drive traffic to your listings and this traffic is where your sales come from. You are paying eBay a marketing fee, if you will. They bring you customers, pretty much handing them to you on a silver platter. It is then up to you to covert these millions of eBay buyers into your paying customers. You do this by providing a good product, at a good price, in a professional looking listing.
The fees you pay eBay pale in comparison to the aforementioned amounts of money you would be paying to operate and drive traffic to your bricks and mortar storefront. The bottom line is you are going to be paying someone if you want to operate either a real or a virtual storefront. There is no such thing as a free lunch in the retail game.
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Tags: eBay, ebay reality check, ebay store fees, how to make money on ebay, how to sell on ebay, search engine rankings
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The main complaint that I had was that eBay wasn’t driving traffic to my store and took steps to prevent it from showing up in search. I would have been willing to have paid extra to have my store listings show up in searches but not to the point of paying auction listing prices for each item.
Unless you have an absolutely unique product that has little, if any competition on eBay, you will not be able to sell it only in your eBay Store. This is because, as you noted, Store listings don’t show up very well in eBay searches. That is, unless there is little to no Auction or Fixed Price listings for the same items.
Add to this the fact that eBay has been playing around with the way Store listings show up in search, and you may be facing an uphill battle if you are only selling your items in your Store.
We have used the time tested strategy of using Fixed Price (or Auction) listings to drive traffic to our eBay Store. In other words, say we have 10 different styles of widgets; we will have a Fixed Price listing for one or two styles and reference in the listing that we have many more available in our eBay Store. We then place a link in the listing that takes the buyer directly to our widget selection in our eBay Store.
This works fairly well and is really the only option if you are competing in a competitive niche.
However, we also sell items that we only list in our eBay Store. These tend to be more expensive items where we only have one or two competitors. Even if the competition has Fixed Price or Auction listings, our Store listings will show up in the search results due to the limited number of total listings.
You have to fine tune your eBay strategies and figure out what works best for your particular products.
We found that the lower priced ($2-25) hobby items we sold would not be profitable to sell on eBay in the auction-to-store model you mentioned. We could get sales but not make an adequate profit. That, on top of the constant tinkering by eBay and increasing shipping costs, caused us to leave eBay as a sales venue. Now we barely sell products online at all. Instead we sell locally at hobby shows and the like. The cost for a booth is more than an eBay store but more items are sold and at a higher profit.
As you noted, it’s very important to understand and track costs vs. profits on eBay or any business. Not doing it has been the downfall of many.
We have found that the only way to have a profitable eBay business is to sell items that are in the $25+ range. In theory, this will allow you to sell items that have a decent profit to make it worth your time.
We say in theory, because if you are selling in a highly competitive niche, then you might be selling an item for $30 that costs you $25. After eBay and PayPal fees, you are making absolutely nothing!
We have had the most success selling in niches that are not saturated. Of course, as we have explained in other posts, these niches have become saturated and we have had to move on to greener pastures.
The only thing that we have found lower priced items ($2-$5) good for is building up your feedback. For a while we sold a line of products in this price range and we were able to build up our feedback quickly. However, it is a whole bunch of work to sell lower priced items for a very low profit.
As we have explained in our post entitled “Finding the Right Product to Sell on eBay” (http://www.lizardwisdom.com/finding-the-right-product/), the key to selling successfully on eBay is to find an under-served niche and sell products in that niche. It is much harder than it sounds, but that is what it takes to become an eBay success.
Once you find your niche, you cross your fingers and hope that nobody notices that you are successful and decides to get a piece of the action. Once this happens (and it will happen), you get to start over from square one.
We’re a wholesaler who started our online selling on eBay. We found ourselves spending $1000+ per month in eBay fees, and suffered many of the common complaints against eBay as a sales avenue – competing against stolen merchandise, dishonest customers, etc. After gradually moving our business to our own website, and building it up bit by bit, we’ve dropped eBay entirely.
Comparing eBay to organic search engine traffic is missing the point about online selling. A more valid comparison would be how does eBay stack up against paid for traffic. We now spend that $1000 a month on Google adwords, and the benefits have been amazing. It was a learning curve, sure, but then so was eBay when starting out. We find the customers who find us through Google ads to be far more honest – real business people who want to build relationships rather than amateurs who want a quick bargain.
Also, there’s no competing against stolen goods.
Darren,
You raise some very valid points. We do mention paid traffic in the post, and this is about the only way that you are going to be able to drive traffic to a stand-alone e-commerce store.
As we mentioned, you are going to pay for your traffic one way or the other. Either pay eBay fees, or pay for traffic via search engines.
eBay is a great venue to sell if you are selling a unique item. If you are selling something that everyone else is selling, then the laws of supply and demand are going to dictate that you are not going to make any money selling these items. This problem is just magnified on a site such as eBay where people have a garage sale mentality and really want to pay zero for just about anything.
In other posts we discuss finding a unique product niche where it is very hard to find a supply of the items and there is little to no competition. If you find this holy grail, then you will have no problem making a good living on eBay. If you choose to compete with the masses, then you will never get ahead.